Venture capital is money provided by professionals who invest alongside management in young, rapidly growing companies that have the potential to develop into significant economic contributors. Venture capital is an important source of equity for start-up companies.
According to the Securities Exchange Commission of Pakistan (SECP) venture capital is defined as follows:.
Venture project means a company, as defined in the Companies Ordinance, 1984, a partnership or a sole proprietorship, which is engaged in a business activity and has such characteristics as may be notified by the Commission, from time to time to be treated as venture projects.
Venture capital company means a company which is principally engaged in financing a venture project, through equity or other instruments whether convertible into equity or not and provides managerial or technical expertise to venture projects; or acts as a management company for management of venture capital fund.
Venture capital fund means companies, which are managed by a venture capital company and raises funds through private placement of equity and other securities, and invests its resources in venture projects.
Professionally managed venture capital firms generally are private partnerships or closely held corporations funded by financial institutions, private and public pension funds, endowment funds, foundations, corporations, wealthy individuals, foreign investors, and the venture capitalists themselves. .
Venture capitalist can be of various types depending on their characteristics. These types can be private equity firms, banks, financial institutions, private corporations, Insurance companies or the Government. .
Venture capital (VC) firms have played a major role in the success of many high- tech startups. These venture capital firms collect capital from pension and endowment funds, which want to get a higher return on their investment relative to the stock market.
